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Thoughts on whole life policies for children?
Posted on 2/15/17 at 1:49 pm
Posted on 2/15/17 at 1:49 pm
My wife and I had our first child 5 months ago. Since then, we've been asked a few times by a friend of the family, who happens to sell life insurance for State Farm, to look into getting a whole life policy for our son. I've been blowing her off for the most part, but I got another email from her today. Before I tell her that I'm not interested I just wanted to make sure that this is something I shouldn't be ignoring. I realize that they build cash value, guarantee insurability as an adult, lock in a lower rate and would help cover expenses in the unfortunate event that he passed away. Are there additional benefits to whole life policies that I'm excluding? What are your thoughts on whole life policies for children?
8
Posted on 2/15/17 at 1:53 pm to ForeverLSU02
quote:You shouldn't be using your money to support his/her retirement or future insurability. There are other, more beneficial things to do to help his/her future. First, term for a kid is incredibly cheap because you should only need around $20-$30k of coverage, and, well, it's a kid. Low risk. Through work, mine is just $1.40 per paycheck. Second, the money you save now can go in a 529 plan or other savings account for his/her future to actually use.
Are there additional benefits to whole life policies that I'm excluding? What are your thoughts on whole life policies for children?
Posted on 2/15/17 at 1:59 pm to ForeverLSU02
If your child dies, how long will it be before you and your wife decide to go back to work? I know that answer for myself will be quite longer than what FMLA would do for me. I'm going to need a nice chunk of change to cover lost income, because there's no way neither my wife nor I will be in the mood to go back to work anytime soon after something like that.
Posted on 2/15/17 at 2:06 pm to ell_13
quote:I was told by this same agent that term insurance isn't available for children. Is this not correct?
First, term for a kid is incredibly cheap because you should only need around $20-$30k of coverage, and, well, it's a kid. Low risk.
Posted on 2/15/17 at 2:07 pm to ell_13
quote:I'm about to open one as we speak
Second, the money you save now can go in a 529 plan or other savings account for his/her future to actually use.
Posted on 2/15/17 at 2:14 pm to ForeverLSU02
I bought an adjustable complife insurance policy for my daughter thru Northwestern Mutual when she was 6 months. $75,000 death benefit, dividends used to increase death benefit. 6 years in I have paid $2325.60 in premiums (32.30/month). It has a cash value of $1200 today and death benefits is up to $78,000. It was too cheap not to get for her. I will pay the premium forever and when she is older I will either cash in and give her the money or let her take over the policy.
My grandparents did that for me and I got a check for roughly $16,000 when I turned 21.
My grandparents did that for me and I got a check for roughly $16,000 when I turned 21.
This post was edited on 2/15/17 at 3:07 pm
Posted on 2/15/17 at 2:16 pm to ForeverLSU02
I believe that is correct. But I can tell you that I was fortunate enough to have been the beneficiary of having a whole life policy and a custodial account set up for me when I was a child. And from that experience I will most definitely be setting up a custodial account for my child and not a life insurance policy.
Posted on 2/15/17 at 2:19 pm to Shepherd88
quote:Why is that?
nd from that experience I will most definitely be setting up a custodial account for my child and not a life insurance policy.
Posted on 2/15/17 at 2:33 pm to ForeverLSU02
Just add a child rider to your term (or permanent) policy. Easy peasey. Not all companies offer it, but most do.
Posted on 2/15/17 at 2:37 pm to ForeverLSU02
quote:I certainly have it through my work, so someone offers it. My wife and I have extra term outside of my work, but my son doesn't so I'm not 100% sure you can get it without an employer but that would be odd to me.
I was told by this same agent that term insurance isn't available for children. Is this not correct?
Posted on 2/15/17 at 2:39 pm to Shepherd88
the insurance policy won't have the opportunity to make anywhere near the rate of return a properly invested account could.
I was in the life insurance business once and I know the incentive that is offered to the brokers who sell those things. When all you have is a hammer in your tool bag, then everything looks like a nail!
I was in the life insurance business once and I know the incentive that is offered to the brokers who sell those things. When all you have is a hammer in your tool bag, then everything looks like a nail!
Posted on 2/15/17 at 2:39 pm to iknowmorethanyou
quote:I was just reading about this. I currently have a universal policy through State Farm. It looks like I can add a child rider to this policy. I just emailed them to confirm.
Just add a child rider to your term (or permanent) policy. Easy peasey. Not all companies offer it, but most do.
Posted on 2/15/17 at 2:43 pm to poops_at_parties
quote:Neither you or I can truly put ourselves in that frame of mind to know how we would react or what we would want. But for me, there's a really good chance I would want to work on something as soon as reasonable. No way could I just sit around all day with my mind on that reality.
If your child dies, how long will it be before you and your wife decide to go back to work? I know that answer for myself will be quite longer than what FMLA would do for me. I'm going to need a nice chunk of change to cover lost income, because there's no way neither my wife nor I will be in the mood to go back to work anytime soon after something like that.
Posted on 2/15/17 at 2:57 pm to ForeverLSU02
Your friend seems like a vulture. I don't see a need for life insurance for your child.
Posted on 2/15/17 at 2:58 pm to ForeverLSU02
It's probably a ripoff but I got one for both of my kids. The premiums were only around $10 per month and basically cover funeral expenses if something were to God forbid happen to them.
I still have one my parents got for me when I was born, and I'm almost 45. It doesn't have much value so I haven't looked into cashing it out. I think it was around $1200 last I looked a few years ago.
I still have one my parents got for me when I was born, and I'm almost 45. It doesn't have much value so I haven't looked into cashing it out. I think it was around $1200 last I looked a few years ago.
Posted on 2/15/17 at 3:02 pm to barry
quote:I agree. She began emailing me about buying life insurance before my son was even a month old and has followed up every other week since. That's why I was about to just go ahead and tell her that I wasn't interested. Not to mention, she doesn't know jack about the product she's selling. Every time I ask a question about life insurance she doesn't know the answer and has to contact her corporate office for answers. I'm trying to throw her a bone since she's a family friend, but I'm starting to get frustrated with her.
Your friend seems like a vulture.
Posted on 2/15/17 at 3:05 pm to ForeverLSU02
Good deal. The cost is the same for 1 child on the rider or 7. No need to add a separate rider in the future. Congrats on the new addition.
Posted on 2/15/17 at 3:05 pm to The Spleen
quote:She's telling me that their minimum whole life policy is $25k for almost $25/month. I've read that other companies offer $10k policies
The premiums were only around $10 per month and basically cover funeral expenses if something were to God forbid happen to them.
Posted on 2/15/17 at 3:06 pm to ForeverLSU02
quote:
I was just reading about this. I currently have a universal policy through State Farm. It looks like I can add a child rider to this policy. I just emailed them to confirm
Be careful with that UL policy and make sure it is properly funded. ALOT of people get left hanging on those in their later years of life because they don't understand how they work. Every premium that you pay gets divided into three (montly cost, cost of insurance, and cash value) monthly cost and cash value stay the same. The cost of insurance on the other hand goes up continuously until it eventually starts eating away at the cash value and then will eventually run it to zero/cancel the policy. They will then give you an option to pay a ridiculous premium or let it cancel and you get zero in return. UL's are beneficial when its used as a cash dump for a business and you are able to properly fund it.
Posted on 2/15/17 at 3:07 pm to iknowmorethanyou
quote:Now she's telling me that State Farm doesn't offer child or spouse riders although I just read on their website that they do
Good deal. The cost is the same for 1 child on the rider or 7. No need to add a separate rider in the future.
I told her this and she had no clue. She has to contact the life insurance department to confirm
quote:
Congrats on the new addition.
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